Insurance firm can't cite negligence to deny relief: SC

The Supreme Court has said that an insurance company cannot raise an issue of negligence to deny claims of compensation, made under the special provision, to the driver or his families for the death or injuries in a road accident.

A bench of Chief Justice Dipak Misra and justices A M Khanwilkar and D Y Chandrachud said the insurer cannot raise any defence of negligence on the part of the victim to counter a claim for compensation made under Section 163A of the Motor Vehicles Act.

The top court set aside a Karnataka High Court’s judgement after relying upon a previous verdict of 2017 wherein it was held that to permit a defence of negligence of the claimant by the insurer would be inconsistent with the legislative object behind introduction of this provision, which is “final compensation within a limited time frame on the basis of the structured formula to overcome situations where the claims of compensation on the basis of fault
liability was taking an unduly long time.”

The bench restored an order passed by the Motor Accident Claim Tribunal, Belagavi, and set aside the high court’s order absolving the insurer from obligation of paying compensation to parents of Shaji Shivaji Dudhade. Shaji was the driver of a car which met with an accident on June 15, 2010.

The car dashed into a truck, resulting in his death and that of two other persons and injuries to two more persons, all of whom were travelling in the car.

The tribunal allowed a claim of Rs 4,60,800 together with interest at the rate 9% per annum, saying under Section 163A, the question of proving that the accident happened due to the rash and negligent act of the driver did not arise.

The high court, however, allowed an appeal by United India Insurance Co Ltd, saying since the deceased driver in this case was the tortfeasor and responsible for causing the accident, compensation could not have been awarded to the appellants.

Under Section 163 A, the vehicle owner or authorised insurer is liable to pay compensation for death or permanent disability due to accident, without a claimant’s obligation to prove wrongful act or neglect on the part of vehicle
owner.